1. PROCEDURE EUROPEAN COMMISSION. Brussels, SUBJECT: STATE AID NO. SA (2014/N) PORTUGAL REGIONAL AID MAP

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1 EUROPEAN COMMISSION Brussels, C(2014) 3576 PUBLIC VERSION This document is made available for information purposes only. SUBJECT: STATE AID NO. SA (2014/N) PORTUGAL REGIONAL AID MAP Sir, 1. PROCEDURE (1) On 28 June 2013, the Commission adopted the Guidelines on regional State aid for (hereinafter "RAG"). Pursuant to paragraph 178 of the RAG, each Member State should notify to the Commission, following the procedure of Article 108(3) of the Treaty on the Functioning of the European Union (hereinafter "TFEU"), a single regional aid map applicable from 1 July 2014 to 31 December In accordance with paragraph 179 of the RAG, the approved regional aid map is to be published in the Official Journal of the European Union and will constitute an integral part of the RAG. (2) By letter of 7 April 2014, registered at the Commission on the same day (2014/39527), the Portuguese authorities submitted a proposal for a regional aid map applicable for the period from 1 July 2014 to 31 December (3) By letter of 29 April 2014, registered at the Commission on the same day (2014/046525) and by letter of 2 May 2014, registered at the Commission on the same day (2014/047555), the Portuguese authorities submitted additional information. 1 OJ C 209, , p.1 S. Ex.ª o Ministro dos Negócios Estrangeiros Rui MACHETE Largo do Rilvas P Lisboa Commission européenne, B-1049 Bruxelles Bélgica Europese Commissie, B-1049 Brussel Bélgica Telefone: (0)

2 2. DESCRIPTION OF THE NOTIFIED REGIONAL AID MAP (4) In their notification, the Portuguese authorities propose a list of regions, with a total population of 8.97 million inhabitants, or 85.01% of the national population, for eligibility for regional aid under the derogations provided in Article 107(3)(a) and (c) TFEU for the period from 1 July 2014 to 31 December The notification lists 'a' areas and non-predefined 'c' areas. (5) The NUTS 2 regions proposed for eligibility under the derogation in Article 107(3)(a) TFEU for the whole period from 1 July 2014 to 31 December 2020 are presented in Table 1 below. The table also presents the maximum aid intensities proposed for each region. Table 1: Article 107(3)(a) TFEU areas NUTS Code Name of NUTS 2 region Maximum aid intensities (in % GGE) PT 11 Norte 25 % PT 16 Centro 25 % PT 18 Alentejo 25 % PT 20 Região Autónoma dos Açores 45 % PT 30 Região Autónoma da Madeira 35 % (6) In their notification, the Portuguese authorities also propose three non-predefined areas as eligible for regional aid under the derogation of Article 107(3)(c) TFEU for the period from 1 July 2014 to 31 December (7) Table 2 below presents the list of non-predefined 'c' areas along with the maximum aid intensity proposed for each area, for which the Portuguese authorities submit that the conditions of criterion 4 set out in paragraph 168 of the RAG are fulfilled. The table also shows the total population of each area proposed 2. A more detailed description of the composition of each non-predefined 'c' area is presented in Annex 1. Table 2: Non-predefined 'c' areas proposed under criterion 4 of paragraph 168 of the RAG Name of zone proposed Algarve Península de Setúbal Grande Lisboa NUTS Code Name of NUTS 3 region concerned Population Maximum aid intensities (in % GGE) PT 150 Algarve % PT 172 Península de Setúbal % PT171 Grande Lisboa (Partly) 10% PT1109 LAU 1 Mafra % PT1107 LAU 1 Loures % PT1114 LAU 1 Vila Franca de Xira % PT LAU 2 S. João das Lampas e Terrugem % Total population of the eligible zone Total 15.76% 2 The population figures used by the Member State refer to total resident population of 2011 (source: 2011 Portuguese census). 2

3 (8) The Portuguese authorities confirm that the proposed maximum aid intensities presented in the tables 1 and 2 above apply to investments by large enterprises. Those intensities can be increased by 10 percentage points for medium-sized enterprises and by 20 percentage points for small enterprises 3. The maximum regional aid ceilings proposed for large enterprises, as well as the increased ceilings for small and for medium-sized enterprises, are only applicable to projects with eligible expenditure below 50 million. 3. ASSESSMENT (9) In accordance with Annex I of the RAG, five NUTS 2 regions of the Portugal are eligible for regional aid under the derogation in Article 107(3)(a) TFEU for the whole period from 1 July 2014 to 31 December In addition, Annex I of the RAG provides that Portugal has the possibility to designate areas containing 15.77% of its national population as non-predefined areas eligible for regional aid under the derogation in Article 107(3)(c) TFEU for the same period. 3.1 Article 107(3)(a) TFEU areas (10) The areas proposed by the Portuguese authorities for eligibility for regional aid on the basis of the derogation provided for in Article 107(3)(a) TFEU for the period from 1 July 2014 to 31 December 2020 are those listed in Annex I of the RAG. (11) Paragraph 172 of the RAG provides that maximum aid intensities applicable to investment by large enterprises in a regions should not exceed: - 50% GGE in NUTS 2 regions with a GDP per capita below or equal to 45% of the EU-27 average, - 35% GGE in NUTS 2 regions with a GDP per capita between or equal to 45% and 60% of the EU-27 average; - 25% GGE in NUTS 2 regions with a GDP per capita above 60% of the EU-27 average. (12) Paragraph 173 of the RAG provides that the above maximum aid intensities may be increased by up to 20 percentage points in outermost regions that a have a GDP per capita below or equal to 75% of the EU-27 average or by up to 10 percentage points in other outermost regions. The Região Autónoma dos Açores and the Região Autónoma da Madeira are both outermost regions mentioned in Article 349 TFEU. (13) The aid intensities proposed by the Portuguese authorities respect the provisions of the RAG, as can be seen from Table 3 below: 3 As defined in the Commission Recommendation of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises (OJ L 124, , p. 36). 3

4 Table 3: Article 107(3)(a) TFEU areas with maximum aid intensities and GDP per capita NUTS Code Name of NUTS 2 region Maximum aid intensities (in %GGE) GDP per capita PT 11 Norte 25% 63.67% PT 16 Centro 25% 66.00% PT 18 Alentejo 25% 72.33% PT 20 Região Autónoma dos Açores 45% 74.33% PT 30 Região Autónoma da Madeira 35% % Measured in PPS, three year average for (EU-27 = %) 3.2 Proposed list of non-predefined Article 107(3)(c) TFEU areas (14) According to Annex I of the RAG, the Portuguese authorities can designate areas with a population of up to 15.77% of the total national population as non-predefined c areas. Compliance with the population coverage allowed will be determined on the basis of the most recent data of total resident population of the areas concerned, as published by the national statistical office. (15) The population statistics used are the most recent data (2011 population census) on the total resident population published by the statistical office of Portugal. This is in line with the requirement set out in paragraph 170 of the RAG. (16) The non-predefined c areas proposed by the Portuguese authorities have a total population of 1.67 million inhabitants, which represents 15.76% of the total national population. The population coverage of the proposed non-predefined 'c' areas is in line with the maximum population coverage allocated to Portugal for this type of areas in Annex I of the RAG. (17) In cases where non-predefined 'c' areas are proposed that are not defined as whole NUTS 3 regions or islands, paragraph 169 of the RAG provides that the notion of contiguous areas normally refers to whole LAU 2 areas or to a group of whole LAU 2 areas which share an administrative border with another LAU 2 area in the group. The Member State may also refer to LAU 1. In the case of Portugal the LAU 1 level corresponds to municipalities and the LAU 2 level corresponds to parishes. The Portuguese authorities designate three entire LAU 1 areas and one entire LAU 2 area as part of one NUTS 3 region Non-predefined 'c' areas in application of criterion 4 of paragraph 168 of the RAG (18) Pursuant to paragraph 168 of the RAG, a Member State may designate as c areas under criterion 4, NUTS 3 regions or parts of NUTS 3 regions that form contiguous areas that are adjacent to an a area. All non-predefined c areas proposed by the Portuguese authorities fulfil the conditions of criterion 4, since they are adjacent to an 'a' area and form contiguous areas, as can be seen from the table 4 below: 4

5 Table 4: Non-predefined 'c' areas in application of criterion 4 of paragraph 168 of the RAG Name of contiguous area NUTS Name of NUTS 3 region in Name of the adjacent POP proposed Code which the zone is located a region Algarve (Entirely) PT150 Algarve Alentejo Grande Lisboa (Partly) PT171 Grande Lisboa Centro Península de Setúbal (Entirely) PT172 Península de Setúbal Alentejo Total POP: Total resident population in the proposed c area on Respect of population ceiling for non-predefined Article 107(3)(c)TFEU areas. (19) Annex I of the RAG sets the population ceiling for non-predefined c areas at maximum 15.77% of total Portuguese population. The non-predefined c areas proposed by the Portuguese authorities have a total resident population of inhabitants. This amounts to 15.76% of the total resident population of that Member State and respects therefore the population ceiling set in Annex I of the RAG. 3.3 Maximum aid intensities proposed for Article 107(3)(c) areas (20) Paragraph 174 of the RAG provides that the aid intensity applicable to investment by large enterprises in 'c' areas should not exceed 10% GGE in non-predefined 'c' regions. (21) The maximum aid intensity applicable in all non-predefined 'c' areas proposed is limited to 10% GGE. (22) In view of the above, the maximum aid intensities for regional investment aid in the 'c' areas notified by Portugal for the period from 1 July 2014 to 31 December 2020 are in line with the maximum aid intensities allowed for under the RAG. 3.4 Increased aid intensities for SMEs (23) In accordance with paragraph 177 of the RAG, the maximum aid intensities applicable to large enterprises can be increased by 20 percentage points for small enterprises or by up to 10 percentage points for medium-sized enterprises. However, the increased maximum aid intensities for SMEs will not apply to aid awarded for large investment projects. 3.5 Other commitments made by the Portuguese authorities (24) The Commission takes note of the following commitments made by the Portuguese authorities in the notification: (a) The Portuguese authorities confirmed that all intentions to grant regional aid will be notified to the Commission in accordance with Article 108(3) TFEU, either as an aid scheme, or as an individual notification, unless a block exemption regulation applies. (b) The Portuguese authorities confirmed that all regional investment aid will respect the maximum aid intensities of the region concerned as defined in the regional aid map approved by the Commission and published in the Official Journal of the European Union. 5

6 (c) The Portuguese authorities confirmed that for large investment projects (as defined in paragraph 20(l) of the RAG) the aid ceilings of the region concerned, as defined in the regional aid map approved and published by the Commission, will be adjusted according to the formula in paragraph 20(c) of the RAG. 3.6 Conclusion (25) In view of the above, the Commission concludes that the regional aid map notified by Portugal for the period from 1 July 2014 to 31 December 2020 is in line with the RAG. (26) The Commission recalls that the maximum aid intensities specified in the regional aid map apply only to investments carried out in sectors that fall within the scope of the RAG, as defined in paragraph 10 thereof. In particular, these aid ceilings apply to the processing and marketing of agricultural products only to the extent laid down in the Community guidelines for State aid in the agriculture and forestry sector 4, or in any guidelines replacing them. 4. DECISION (27) The Commission has accordingly decided: - to approve the regional aid map of Portugal for the period from 1 July 2014 to 31 December 2020 as set out in the Annex, as it fulfils the conditions laid down in the Guidelines on regional State aid for to publish the regional aid map as an Annex to this decision in the Official Journal of the European Union. The full text of this letter in the authentic language will be published on the following Internet site: (28) Any request concerning this letter should be sent by registered letter or fax to: European Commission Directorate-General for Competition State Aid Registry B-1049 Brussels Fax No: Yours faithfully, For the Commission Joaquín ALMUNIA Vice-President 4 OJ C 319, , p.1. 6

7 ANNEX to the decision on case SA (2014/N) Guidelines on regional State aid for (OJ C 209, , p. 1) Portugal - Regional aid map applicable from until Regions eligible for aid under Article 107(3)(a) TFEU from to NUTS 2 code Name of NUTS 2 region Maximum aid intensities (applicable to large enterprises) PT11 Norte 25 % PT16 Centro 25 % PT18 Alentejo 25 % PT20 Região Autónoma dos Açores 45 % PT30 Região Autónoma da Madeira 35 % 2. Regions eligible for aid under Article 107(3)(c) TFEU from until (a) Non-predefined Article 107(3)(c) regions NUTS Code Name of NUTS region (and eligible parts of the NUTS region concerned) Maximum aid intensities (applicable to large enterprises) PT150 Algarve (Entirely) 10% PT171 Grande Lisboa (Partly) 10% Only the following parts of the above NUTS 3 region are eligible: PT1109 Mafra; PT1107 Loures; PT1114 Vila Franca de Xira; PT S. João das Lampas e Terrugem. PT172 Península de Setúbal (Entirely) 10% For investment projects with eligible expenditure not exceeding EUR 50 million this ceiling is increased by 10 percentage points for medium-sized companies and 20 percentage points for small enterprises as defined in the Commission Recommendation of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises (OJ L 124, , p. 36). For large investment projects with eligible expenditure exceeding EUR 50 million, this ceiling is subject to adjustment in accordance with paragraph 20(c) of the Guidelines on regional State aid for